Monday, September 28, 2020

MAGA Is A Spent Farce

The U.S can't afford another four years of circus quality "greatness". Trump is running the U.S. government the same way he ran his own businesses, into the ground...

This week we found out why Trump has been refusing to release his tax returns. It turns out that he pays less taxes than the average hot dog stand:

"Donald J. Trump paid $750 in federal income taxes the year he won the presidency. In his first year in the White House, he paid another $750.

He had paid no income taxes at all in 10 of the previous 15 years — largely because he reported losing much more money than he made."

It's no wonder therefore that Trump has absolutely imploded the U.S. budget, he doesn't believe in paying ANY taxes. Imagine that this serial tax scammer is now the "gatekeeper" for all of the fraudulent values of the right. A lifetime con man who pays more for hooker payoffs than he does on taxes. Why does he have to cheat on his wives when he trades them in like used cars? I could never figure that out. He is merely a mirror reflection of the people who elected him. History will say they were a late stage circus of 100% corrupted fake Christian con artists.

Here below, we see U.S. GDP growth adjusted for the deficit. What I call "Honest GDP". The best two years of the post-2008 cycle were under Obama. The economy peaked in 2015. By 2016, the economy was starting to sag, however, Trump's Tax Cut bought it more borrowed time. The massive one-time tax repatriation in 2018 gave the illusion of a semi-functioning economy; however by 2019, the smoke and mirrors had worn off and the full impact of the tax cut looting imploded the overnight "repo" market. COVID is the last nail in the coffin.

The U.S. started renting greatness under Ronald Reagan, during the era when the country went from being the World's greatest creditor nation to the World's largest debtor in just one decade. According to Dick Cheney, Reagan proved that deficits don't matter. If you don't mind destroying your own currency, then that is true indeed. The process is well underway. 

It's clear going into this toxic election that the Democrats are not capable of turning the Titanic. Because they can't control fear. And Trump's entire campaign strategy is predicated upon fear. Moreover, the majority of the U.S. is still in massive denial as to how we got here, so it would be better to let the GOP follow Captain Dumbfuck straight to the bottom and THEN take over. Which is how it went down in the 1930s, with FDR coming in at the bottom. Change comes when everyone agrees that the status quo is over. And four years of non-stop MAGA brainwashing has kept that day from arriving. Societal disintegration is the new greatness.

In the age of non-stop monetary bailouts for the rich, Republicans now fear socialism for everyone else. For good reason. Because when the bailout for the middle class arrives, credit markets will explode. The only question on the table is what comes first - inflationary explosion due to too much middle class stimulus or deflationary default due to lack of middle class stimulus. Either way, the result is the same, the credit bubble explodes, and deflation is the end result.

A lot of people have made the big bet on inflation, however, they forget that Banana Republican policies are inherently deflationary. Robbing the middle class to pay the rich. Which is why deflation is rising non-stop and yet they are oblivious to that fact. They see their own fake wealth increasing and they assume it's the same for everyone else. The same way they've been oblivious to rising poverty for forty straight years straight. Republicans believe that poverty is solely a racial issue. Education is coming the hard way.

The payback will come via the fact that the vast majority of today's wealthy "elite" will not successfully navigate this deflationary/inflationary gauntlet. Most will watch their wealth evaporate first due to defaults and then via hyper-inflation.

The bottom line is that profligate tax cuts for the ultra-wealthy, now on steroids under King Donny, have put the dollar on borrowed time and money. At present the U.S. is borrowing 17% of GDP to have a -5% growth rate. A 22% depression by any other name. Had the U.S. still been on the gold standard, the bread lines would be wrapped around every street corner by now, as this level of deficit stimulus would be impossible.

It's a testament to Globalization's scale, that despite unheard of stimulus, the World is STILL falling back into deflation. Of course, in the U.S. given the stimulus lapse, it should come as no surprise to anyone who can fog a mirror. Not many people, to be sure. 

Getting back to Trump Casino, the dreaded month of September is almost over, bringing the month with all of the historically famous crashes.

Looking back on this month, it's clear that the MAGA Cap Tech bubble exploded at the beginning of the month and then bulls and bears fought to a sideways draw for remainder of the month.

Bulls are convinced that the uptrend will resume any day now.

However, the all-important MAGA stocks are floundering, and clearly three wave corrective.

Basically identical to the February high:

Here we see the total options call / put ratio, whereas I usually show the equities-only ratio. Clearly, gamblers are a long way from capitulation:

In summary, notwithstanding several epic bear market rallies, there is no leadership in the stock market.

Which is how I would describe the White House. No leadership.  Just lethal amounts of corruption and bullshit.

Rigged markets and rigged elections. 

As usual.